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AP file photo Senate Majority Leader Sen. Harry Reid, D-Nev., speaks during a news conference on debt ceiling legislation on Capitol Hill in July 2011. Reid said he was never involved in an alleged effort to help derail a federal investigation into Utahn Jeremy Johnson’s businesses, his office said Sunday, dismissing Johnson’s claims that he paid money he believed was meant to bribe the Nevada Democrat.
Payday lenders and the Harry Reid connection

Payday lenders donate $126K to Senate majority leader, who denies having links to Utah scandal.

First Published May 12 2013 01:01 am • Last Updated Dec 07 2013 11:31 pm

Washington » Fearing new regulations in the aftermath of the financial crisis, payday lenders decided to make a major play for the support of Senate Majority Leader Harry Reid. They contributed more than $126,000 to his campaign as the Nevada Democrat attempted to beat back a tea party challenge, hoping that the man who controls the Senate agenda would protect their interests.

Their gambit didn’t stop the creation of a new Consumer Financial Protection Bureau, which Reid supported.

At a glance

The Swallow probe

Indicted St. George businessman Jeremy Johnson, who faces 86 criminal counts, has alleged that Utah Attorney General John Swallow helped broker payoffs to enlist the aid of Senate Majority Leader Harry Reid in derailing a Federal Trade Commission investigation of Johnson’s I Works business.

Swallow and Reid deny the allegations. The Justice Department is investigating.

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And yet, it may have led to Reid getting linked to an alleged bribery scandal in Utah, involving state Attorney General John Swallow and indicted St. George businessman Jeremy Johnson.

At the heart of both endeavors was the late Richard Rawle, a Provo millionaire who built an empire of Check City locations, including more than 30 in Nevada. He was deeply involved in the federal lobbying campaign and told Johnson he could use his clout with Reid to help end a Federal Trade Commission investigation.

The cost: $600,000.

Rawle, in a deathbed affidavit, and Swallow, his former employee, say the Johnson affair was a standard lobbying effort that never got off the ground. Reid’s staff said he didn’t know about the plot and didn’t discuss it with Johnson or try to stop the FTC probe.

Johnson, who is charged with a number of financial crimes, tells a far different story. He said Swallow convinced him Rawle was close enough to Reid to facilitate a bribe that would spare him and Johnson’s I Works company.

What actually happened remains unclear. Swallow is under federal investigation and the court cases against Johnson remain in preliminary stages. The case does illustrate how well-funded interests seek to lean on legislators to get what they want, though their tactics don’t always work.

Working the system » President Barack Obama has long wanted to cap interest rates payday lenders can charge for short-term loans.

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These lenders feared Congress would institute such a cap in 2009 as it began work on a Wall Street regulatory bill. In reaction, they doubled their lobbyist spending and nearly doubled contributions to lawmakers, giving $1.5 million through 2009 and 2010, according to a report by the watchdog group Citizens for Responsibility and Ethics in Washington, which wants more payday-loan regulation.

The lobbying blitz was partially successful. No version of the bill ever included a cap on interest rates, but it did create the Consumer Financial Protection Bureau, charged with overseeing everything from home mortgages to credit-card rates to payday loans.

The donation push targeted mostly key lawmakers negotiating the legislation, but it also went to those who ended up supporting the reform bill, such as Reid. CREW found that the majority leader received the third largest amount in donations from the industry — $43,900 — in 2009 and 2010. Reid didn’t make the industry’s top 10 donor list that CREW compiled for the two previous years, 2007 and 2008.

The CREW study was limited to only 11 payday-loan companies and two trade groups and therefore drastically undercounted the contributions Reid actually received.

A broader Salt Lake Tribune review of Reid’s contributions found that Reid accepted more than $126,000 in contributions from the industry through its executives and associated political action committees.

That’s a lot of money, especially for the payday-loan sector, but it was just a small portion of the cash Reid raised for his 2010 re-election bid. He spent nearly $26 million to beat Republican Sharron Angle and retain his seat. Not surprisingly for a Nevada politician, Reid’s top-donor tally is dotted with gambling ventures. MGM Resorts provided more than $200,000 on its own.

Money and influence » The Rawle family gave $6,800 to Reid as part of the campaign, but through the years has invested far more in Utah’s federal politicians, with Rep. Jim Matheson at the top of the heap. The Democrat has received $56,300 from the family behind Check City. Other notables include Sen. Mike Lee, R-Utah ($36,200), Rep. Jason Chaffetz, R-Utah ($27,100), and GOP presidential candidate Mitt Romney ($15,000).

Johnson was a regular political contributor himself, though mostly on the state level. He sent hefty amounts to former Utah Attorney General Mark Shurtleff.

On the federal level, Johnson contributed to Sen. John McCain’s 2008 presidential bid, Shurtleff’s short-lived Senate run in 2010 and Lee’s successful campaign that same year.

Johnson contributed to just one Democrat, giving the maximum individual amount of $2,400 to Reid on July 14, 2010.

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